Kasich veto will affect county coffers

The executive director of the County Commissioners’ Association of Ohio said she’s hopeful state legislators will override Gov. John Kasich’s veto on a proposed tax increase in the new two-year budget meant to buoy county services and transit authorities.

Suzanne Dulaney said she’s “cautiously optimistic” the state Senate will follow the House’s overwhelming 87-10 vote against the governor’s rejection of raising taxes on health insurers. That proposed tax increase is meant to replace revenue lost from a sales tax on Medicaid managed care organizations (MCOs) the federal government is eliminating.

Instead, Kasich’s budget is suggesting one-time payments to the state’s 88 counties to replace the loss of the Medicaid MCO tax revenue. The governor’s office said the $207 million tax hike on health insurers is too risky, given that the approval it would require from the U.S. Department of Health and Human Services is considered a slim prospect.

Dulaney said if the Senate also approves the veto override the proposed tax increase on health insurers must still receive federal approval by the Centers for Medicare and Medicaid Services. She said if the governor’s veto is not overridden the state’s counties will suffer.

“This is a significant loss to counties in the absence of revenue replacement,” she said. “The House vote was a very nice message that they’ve heard the counties need help. We’re grateful that (it) opened the door for us to try.”

A letter the commissioners’ association sent to Kasich stated, in part: “This revenue loss would reduce or eliminate funding for programs that invest in economic growth and exacerbate the growing pressure on important systems like criminal justice, public safety, and child protection. The demand on these services is only growing in the wake of the opiate epidemic.”

In 2016, the state’s counties and transit authorities split $209 million in Medicaid MCO sales tax revenue. The counties have received proceeds from the tax the past seven years.

Dulaney said if Kasich’s veto stands both mandated and non-mandated county services would be affected, with non-mandated services “the first to be looked at.”

Last calendar year, Fulton County received $481,398 from the Medicaid MCO sales tax, just over six percent of the total sales tax collected. Administrator Vond Hall said the governor’s proposed one-time payment to counties would be spread out over two payments.

“We have not discussed what parts of the budget would be reduced if we lose the almost half a million dollars of revenue,” he said.

The state’s permissive sales tax revenue amounts to just under 58 percent of Fulton County’s general revenue fund used to provide public services.

“Counties are already maxed out on permissive sales tax authority, so it’s a difficult challenge, for sure,” Dulaney said.

Fulton County Commissioner Bill Rufenacht said if the veto isn’t overridden the county’s budget will be at the mercy of the state’s one-time payment, the amount of which hasn’t been disclosed. He said the county budget has always been a moving target for the state.

“Until we’re farther along in this process, I would not be interested in making any budget revisions at this time,” he said.

A spokesperson for the governor’s office did not return requests for comment.